Appeal from judgment of Court of Common Pleas of Dauphin County, No. 300 Commonwealth Docket 1960, in case of Commonwealth of Pennsylvania v. Safe Harbor Water Power Corporation.
Robert R. Batt, with him Ballard, Spahr, Andrews & Ingersoll, for appellant.
George W. Keitel, Deputy Attorney General, with him Walter E. Alessandroni, Attorney General, for Commonwealth, appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Eagen. Mr. Chief Justice Bell and Mr. Justice O'Brien concur in the result. Dissenting Opinion by Mr. Justice Roberts.
Safe Harbor Water Power Corporation (appellant) has appealed from the judgment of the Court of Common Pleas of Dauphin County dismissing its appeal to that court in connection with its 1955 corporate net income tax liability. Appellant had filed its report of that tax on April 11, 1956 (the due date was April 15,
), and had reported tax due of $56,345.37. The Commonwealth of Pennsylvania (Commonwealth) subsequently settled the tax at $89,571.55; but on petition for resettlement it reduced the tax to $86,006.22. The original settlement was mailed to appellant on February 18, 1959.
The questions involved in the administrative proceedings and in the court below were reduced on appeal here to two: (1) was the settlement timely in view of the provisions of § 8(a) of the Corporate Net Income Tax Act, Act of May 16, 1935, P. L. 208, reenacted and amended in Act of April 8, 1937, P. L. 227, 72 P.S. § 3420(h) (Act); and (2) what is the proper computation of the gross receipts allocation fraction (appellant having allocated only a small amount to Pennsylvania and the Commonwealth having allocated all to Pennsylvania)? Since our determination of the procedural question disposes of the case, we need not discuss or reach the gross receipts fraction question.
Section 8(a) of the Act of 1935, supra (as amended in 1937), states as follows: "All taxes due under this act shall be settled by the department, and such settlement shall be subject to audit and approval by the Department of the Auditor General, and shall, so far as possible, be made so that notice thereof may reach the taxpayer before the end of a year after the tax report was required to be made." Under this requirement, settlement of appellant's 1955 corporate net income tax was required to be made so that as far as possible*fn* notice thereof would reach appellant no later than April 15, 1957, one year after the due date. The copy of the settlement was, in fact, not mailed to appellant until February 18, 1959. Therefore, the settlement was at least one year and ten months late in reaching the taxpayer.
The only previous case in which the issue of timeliness was before this Court was Commonwealth v. Allied Building Credits, Inc., 385 Pa. 370, 123 A.2d 686 (1956). In that case, we sustained the lower court's decision holding that the settlement was invalid because it was made late. In doing so, we adopted excerpts from the opinions of the court below which established certain principles applicable to these situations. They can be summarized as follows: (1) if a settlement is not made within the time provided by the statute, the burden is upon the Commonwealth to explain why the settlement should not be held invalid because of lateness; (2) the justification for permitting the Commonwealth to explain in the first instance is the presence of the phrase "so far as possible" in § 8(a) of the Act; (3) this phrase relieves the Commonwealth from compliance with the time requirements of the statute under circumstances wherein the Commonwealth was unable to act at all or, though able to act, was under some disability which prevented it from acting promptly; (4) what constitutes such circumstances is a question which must be determined on the facts of each case.
Since our decision in the Allied Building Credits case, supra, the Court of Common Pleas of Dauphin County has decided six cases besides the present one, five in favor of the Commonwealth*fn1 and one against ...